How to Protect Your Business From Dishonest Employees

Scified EditorialsBy Chris Sep 15, 2022Comments

Statistics and news feeds show that most fraud in business comes from within companies, namely from their employees. This can be very frightening, especially for business start-ups, because anyone can pose a threat. No one is immune to having a scammer in their ranks, not big corporations, not Payday Depot loan companies, not the grocery store near your house.

But this does not mean that the idea of opening your own business is doomed to failure from the start. There are ways to recognize even a potential fraudster and prevent possible problems.

Keep Managing Accounts

Even if you are not a fan of paperwork and bureaucracy, you still need to keep various records. Thanks to them, you can easily navigate your expenses and profits and understand whether there is a thief among your employees. Even the very existence of records can warn a would-be thief against stealing because when you check the next record, his deception will come to the surface.

In addition to protection and a way to combat fraud, records can be a valuable source of information about the profitability of a business. They may also give you the idea of changing suppliers or buying new equipment that will bring you even more profit.

Check the Records Yourself or Take Part in the Process

Accounting can only be an effective way to combat fraud if it is in the hands of someone interested in it. And who, if not you, is most interested in catching the thief? Of course, it will take your time and effort, but in return, you will be absolutely confident in the safety of your funds.

If you allow an individual employee to do the accounting himself, the risk of fraud on his part will increase many times over. If you want to save time, it will be enough to participate in the inspection of records. This will not give the maximum result, as if you do it yourself, but it will also have the effect of warning dubious employees.

Increase Control Over Expenses

Financial leaks are possible from the very first stages of production: procurement. There are schemes to launder finances when purchasing materials to create goods, so it is worth regularly checking the correspondence of purchased raw materials and the number of goods received in the end.

There are several popular scam schemes at this stage of production. In the first case, the purchasing manager may indicate a greater number of materials than their actual quantity. And the amount that came in for nonexistent materials is shared with the supplier, both of whom are left on the hook, and the company suffers an unjustified loss.

In the second case, a trivial resale of the finished material is possible. The employee includes more resources into the accounting than the production requires and then sells the remainder, which did not get into the counted part.

Such schemes can be exposed by a strict accounting of losses, the number of purchased materials, and the final result.